Gasunie reports solid results in 2014

Dividend payment of € 362 million to the Dutch state (3.9% on the invested capital)

Gas roundabout developing well: more gas supplied and traded

Reduced production of gas in Groningen: need for more imports and quality conversion

Gasunie invests in active role of gas infrastructure in sustainable energy supply

In 2014, gas infrastructure company N.V. Nederlandse Gasunie saw its revenue increase to € 1,651 million (2013: € 1,464 million). The net profit in 2014 amounted to € 603 million (2013 normalised: € 551 million), on an invested capital of € 9,295 million. Gasunieʼs sole shareholder, the Dutch State, will receive a dividend of € 362 million (3.9% on the invested capital). The increase in reported profit is largely due to the expiry of the pay-back obligation of the Dutch gas network operator Gasunie Transport Services (GTS). When normalised for this expiry, the increase in net profit can mainly be explained by the lower energy costs for gas transport as a result of the relatively mild winter in 2014 and the lower financing costs. The lower energy costs will be settled in future tariffs. New infrastructure projects and additional capacity sold by Gasunie participations NEL, BBL and EnergyStock have resulted in extra revenues. This largely offset the decline in revenues due to the efficiency discounts on the tariffs as determined by the regulators in the Netherlands and Germany. In 2014, Nord Stream paid out dividend for the first time.

For 2015, Gasunie expects a decrease in operating profit from regular operating activities. Revenues will continue to fall due to further efficiency discounts. In the past few years, the effects of these discounts were offset by revenues from new assets. For 2015 and the following years, Gasunie will shift its investments from expansion projects to replacement projects, which will make it increasingly difficult to offset the discounts.

Investment expenses in 2014 amounted to € 592 million. This concerns investments in expanding the gas roundabout and investments in the context of the multiple-year replacement programme that started in 2013. With this programme, Gasunie guarantees that the gas transport network will be able to continue to contribute to a more sustainable energy supply in the coming decades, for both customers and users, in a safe, affordable and reliable way.

New phase

In the Netherlands and Europe, a new phase in gas supply is dawning. Han Fennema, CEO of Gasunie comments: ‘The Dutch and European gas sector finds itself at a turning point. There are debates going on about earthquakes and gas production, geopolitical dependencies, shale gas and the position of fossil fuels in the energy mix. As a result, social and political support for natural gas is under pressure. In the future, natural gas will not in all cases and at all times be the only solution. But gas and gas infrastructure can continue to play an important role as a link in the future energy system – a link that is clean and climate-neutral, limits geopolitical dependency, and is also reliable and affordable. The challenge will be to actually prove this and make sure it is well understood. For instance, replacing coal and oil by gas is a quick and inexpensive way of achieving climate benefits and thus reducing the cumulative CO2 emissions in the coming decades as much as possible. A well-functioning European emissions trading system (ETS) is essential in this.’ The problem of earthquakes caused by the extraction of natural gas gives rise to feelings of insecurity and a lack of trust among residents in the north of the Netherlands. Fennema: ‘This lack of trust is not fitting for a form of energy that should serve the public interest in decades to come. It is therefore important that we restore this trust.’

Less Groningen gas

The Minister of Economic Affairs is currently studying the possibilities of further reducing production from the Groningen gas field. The reduction of natural gas production in Groningen in the longer term had already been anticipated, as the gas field will at some point be exhausted. This was one of the reasons for the Dutch government’s gas roundabout policy. However, because of the earthquakes, production is declining faster than expected. Thanks to the gas roundabout, the market can absorb the effects by attracting gas flows from other sources in the Netherlands and abroad. The ‘greenification’ of the gas roundabout by feeding in sustainably produced gas, as well as the collaboration with other, sustainable energy sources, also forms part of the new chapter in gas supply.

Quality conversion

In order to keep the security of supply in the Netherlands up to standard, more natural gas will be imported. Liquefied natural gas (LNG), which can be shipped from all over the world, also plays a role in this. LNG is a high-calorific gas that cannot replace the low-calorific Groningen gas without modification. High-calorific gas can be converted into low-calorific gas by mixing in nitrogen. Dutch network operator GTS provides the facilities for this quality conversion. Of course, there needs to be enough high-calorific gas available for conversion. At the request of the Minister of Economic Affairs, GTS has started preparing the expansion of its quality conversion facilities, which are expected to be put into operation by the end of 2019 to insure security of supply for customers as from 2020.

Goods transport discovers liquefied natural gas

In 2014, Gate terminal has evolved into a European hub for liquefied natural gas (LNG). Gate terminal contributes to the spread of natural gas supply routes and therefore also the security of supply in north-west Europe. In 2014, the number of vessels for the supply and transit of LNG grew to 34 (2013: 23). This growth mainly concerns small-scale (particularly truck loading) and reloading activities. LNG is a cleaner transport fuel than, for example, diesel, which means that natural gas makes an important contribution to reducing emissions in shipping and road transport. Since January 2014, Gate terminal has at its disposal a loading station for approximately 5,000 tank trucks per year. In 2014, together with co-shareholder Vopak, Gasunie decided to further expand Gate terminal’s LNG break-bulk infrastructure and services.

Greenifying the gas roundabout

In 2014, the Netherlands has grown into one of the most attractive and liquid gas trading markets in Europe thanks to the gas roundabout strategy. In the bilateral Over-The-Counter (OTC) trade, gas trading facility TTF took the No. 1 position in Europe in 2014. The joint regulators in Europe, united in ACER, refer to the Netherlands as an example of a well-functioning gas market with healthy competition, resulting in lower gas prices.

‘Our long-term ambition is a CO2-neutral energy supply, with the gas roundabout facilitating green energy,’ says Fennema. ‘Gasunie wants to play an active role in the transition towards a sustainable energy supply. That’s why we’re working for example with HarvestaGG on an innovative project in the east of the Dutch province of Groningen. This project converts grass into several green products, including biogas, which Gasunie will convert into bio-LNG for green road transport.’

Key figures

In € million

2014

2013*

Revenues

1,651

1,464

Normalised revenues

1,651

1,670

EBITDA

1,186

1,034

Normalised EBITDA

1,186

1,149

EBIT

893

757

Normalised EBIT

893

873

Net profit

603

464

Normalised net profit

603

551

Operational cash flow

979

622

Normalised operational cash flow

979

854

In € million

2014

2013

Total assets

10,299

10,188

of which cash position

47

36

Net debt

4,056

4,248

* Normalised for the effects on revenues of the method decisions 2010–2013 and release of a part of the pension provision in 2013

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